Fastmarkets monthly base metals market update

Key points

1. Copper prices soar to record $13,270/t in early 2026
   Copper prices entered 2026 on a powerful upward trajectory, breaking multiple records throughout December and in early January. The official LME copper cash price hit an all-time high of $13,270 per tonne in early January.
   

2. Production disruptions and resource secruity drive optimistic outlook
   Fundamentals around production disruptions, potential further Section 232 supply distortions, electrification/AI demand acceleration, and, increasingly, government policies targeting resource security, underpin an optimistic narrative.
   

3. Short-term risks loom amid demand destruction and market volatility
   But risks abound from shorter-term indicators, including overbought technical signals, geopolitical shocks, tariff uncertainties, weak manufacturing activity data globally, and stretched equity markets. We will see more demand destruction, thrifting, substitution, and destocking by price-sensitive industrial users this year.

What do our analysts say?

Our base-case copper price forecast scenario reflects a balanced market but also considers the abundant risks. It has been revised higher to an average of $10,943 per tonne in 2026, up from $10,634 per tonne previously. Given the risks, however, it is prudent to prepare for alternative potential scenarios, with room for daily pricing to experience both significant rallies that could challenge $15,000 per tonne at the bullish extreme, and sharp corrections that may test the first major support levels in the $10,000-11,000 per tonne range.

Andrew Cole, Fastmarkets

Key points

1. Aluminium prices surge past $3,000/t, poised for further gains in 2026
   LME aluminium closed 2025 with an impressive 18.5% gain, entering the new trading year firmly above $3,000 per tonne. Fastmarkets forecasts the light metal to advance further given the current macroeconomic backdrop and expectations of a market deficit in 2026. The light metal price is likely to rise towards $3,200 per tonne in the first half of the year.
   

2. Geopolitical risks could disrupt aluminium supply via Strait of Hormuz 
   While there is no immediate supply threat, geopolitical risks remain a key upside factor. Renewed tensions and the potential for US military intervention in Iran could put the Strait of Hormuz back in the spotlight. Any disruption to this critical shipping route—particularly if Iranian forces attempt to block it—would impact the flow of primary aluminium from the Middle East, potentially triggering a sharp price surge.
   

3. EU CBAM costs to boost Rotterdam aluminium premiums in 2026
   Fastmarkets forecasts the Rotterdam P1020 aluminium premium to strengthen in January 2026. Carbon costs continue to underpin European premiums. Fastmarkets will reflect additional EU Carbon Border Adjustment Mechanism (CBAM) costs in its benchmark duty-paid aluminium P1020A, billet, and primary foundry alloy (PFA) premiums effective January 1, 2026, when the definitive period of CBAM begins.
   

What do our analysts say?

Aluminium enters 2026 on a strong footing, supported by last year’s gains and a forecasted market deficit that could propel prices higher in the first half of the year. While fundamentals remain constructive, geopolitical flashpoints – particularly any disruption to the Strait of Hormuz – pose significant upside risks. At the same time, European premiums are set to strengthen, underpinned by rising carbon costs and the definitive implementation of CBAM, adding further complexity to pricing dynamics.

Andy Farida, Fastmarkets

Key points

1. Nickel prices surge amid uncertainty over Indonesia’s mining quotas
   The nickel cash price rallied aggressively towards the end of December due to the risk that Indonesia – the world’s top producer – could limit nickel ore mining quotas in 2026, even though quotas have yet to be announced.
   

2. Supply risks propel nickel prices to $16,500/t despite oversupply
   Although the market remains in a state of structural oversupply, the risk that the Indonesian government could take a stronger stance and enforce greater supply discipline was enough to push the nickel price higher towards the end of the month. For the first three weeks of December, the price remained below the $15,000 per tonne level, as it had been in November. However, in the last week of December, supply risk pushed the price higher, ending the month close to $16,500 per tonne.
   

3. Uncertainty over 2026 quotas halts PT Vale Indonesia’s mining operations
   There has not been any announcement regarding the final quotas for 2026. In fact, in the absence of such quotas, PT Vale Indonesia has halted mining activity. Only once these quotas are announced will the market have a clear view of possible supply levels.
   

What do our analysts say?

The nickel market has been in a structural surplus since 2022, due to an oversupply of – mostly Indonesian – material. If the recent run-up in prices is to be sustained, then Indonesia needs to show supply discipline. However, the market still awaits the announcement of final 2024 quota levels.

Olivier Masson, Fastmarkets

Key points

1. LME lead prices end year volatile but balanced
   Three-month LME lead prices had a volatile end to the year. Prices broke lower out of the long-held (May to November) sideways range in December after a short-lived break higher in November. But by year-end, prices were back in the range, highlighting that the market remains well-balanced overall.
   

2. Lead market faces tight concentrates despite supply surplus
   The International Lead and Zinc Study Group data supports this view, putting the market in a 20,000-tonne supply surplus in the first ten months of 2025, after a 70,000-tonne surplus across the whole of 2024. The concentrate market remains tight; the Fastmarkets’ spot treatment charge for low-silver, cif China concentrates, was assessed at minus $165 per tonne in December, the weakest it had been all year. It was minus $60 at the end of June and minus $15 in December 2024. The reason for the negative TC is that mine supply has been growing at a slower pace than primary refined supply.
   

3. Polarized LME lead positions signal potential for price volatility
   The funds trading LME lead remain polarized with 41,555 lots of longs and 42,194 lots of shorts. Short-covering or long liquidation could add to volatility if prices become more directional again.
   

What do our analysts say?

Lead continues to look balanced in terms of supply and demand, but with prices range-bound, they are being left behind by the other base metals that all put in strong performances in December. This raises the question of whether lead will play catch-up.

William Adams, Fastmarkets

Key points

1. AI investment and global agendas drive bullish market sentiment
   Positive price drivers remain for the moment as the AI investment surge has amplified the bullish narrative created by the decarbonization agenda, decoupling supply chains, increased military spending, and the potential demand boost from rebuilding Gaza and potentially Ukraine.
   

2. Market vulnerable to correction amid priced-in bullish themes 
   The scale of price gains suggests bullish themes have already been priced in, while the volatile macroeconomic and geopolitical landscape risks a broader correction in financial markets in the coming months.
   

3. Smelter bottlenecks pose short-term risk amid growing mine supply
   Pressure on smelters risks creating a bottleneck for concentrate supplies in the short term. But with mine supplies increasing and smelter expansions in China feeding through, we maintain that supply growth will create fundamental price weakness.
   

What do our analysts say?

Positive price drivers remain for the momentum, but we maintain prices risk correcting towards mid-2026.

James Moore, Fastmarkets

Key points

1. Tin market tightens amid Myanmar import rebound and geopolitical risks
   November Chinese customs data showed a sharp rebound in tin ore imports from Myanmar, aligning with the end of the rainy season and improved weather across Wa State. This points to a partial resumption of mining activity, though operational stability remains uncertain. Meanwhile, geopolitical risks in key producing countries like the DRC and Nigeria continue to add background uncertainty. With no major new supply expected, the market remains structurally tight.
   

2. Semiconductor boom bolsters tin demand despite weak tinplate segment
   Traditional segments like tinplate remain soft, but global semiconductor sales rose 21.2% in the first ten months of 2025, according to the Semiconductor Industry Association. This growth is driven by AI, electrification, and data infrastructure, strengthening tin’s strategic demand base.
   

3. Liquidity and dovish signals sustain momentum amid volatility risks
   Ample global financial liquidity and dovish macroeconomic signals continue to support risk appetite. While near-term momentum remains intact, stretched technical indicators and gradually improving supply visibility could introduce bouts of volatility. Markets may become increasingly reactive to incremental data.
   

What do our analysts say?

Tin enters 2026 in a fragile balance. Partial supply recovery meets persistent structural tightness. With financial liquidity abundant and positioning increasingly momentum-driven, we expect heightened price sensitivity and sharp two-way moves to define early 2026.

Rory Deng, Fastmarkets

Key points

1. Global copper markets face 2026 amid record highs and supply strains
   Global copper markets are ending 2025 and facing 2026 uniquely strained after an unprecedented year – record high exchange prices due to supply-demand imbalances created by shortages in the refined market and record low concentrate treatment charges (TCs) due to imbalances created by shortages in the raw material market.
   

2. Smelter cuts could push copper prices higher in 2026
   The dilemma is that rebalancing the concentrate market requires smelter production cuts, but this will only reduce metal supply, exacerbating tightness in the refined market. In other words, for the TCs to begin normalizing in 2026, exchange prices may be forced even higher.
   

3. Potential Section 232 tariffs poised to disrupt US copper trade in 2026
   Speculation about the possibility of Section 232 tariffs being levied on US copper imports has not gone away and may well distort trade flows and regional inventories again in the first half of 2026 as it did in 2025.

What do our analysts say?

The copper market’s fundamentals remain structurally bullish, supported by supply disruptions, regional availability distortions, and resilient long-term demand prospects driven by electrification and investment in AI infrastructure. Given this background, the price uptrend may remain intact a while longer. But, having come so far already, we should be wary about how much of the bullish narrative is priced in by now, and also wary about how the speculative froth in the price could be quickly blown away by any major correction in equity markets and especially in AI stocks.

Andrew Cole, Fastmarkets

Key points

1. Aluminium prices surge amid electrification and AI-driven demand in 2025
   LME aluminium prices have risen 12.3% year-on-year over the January–November period, signalling that the April Liberation Day sell-off has been firmly shrugged off and the bulls have regained control. The light metal ranks as the third-best performing base metal, behind copper, which is up 24.5%, and tin, which has stolen the spotlight with a 33.8% gain, compared to a year ago. This strength reflects robust demand driven by significant investment in electrification, AI data centres, and defence. These structural trends are expected to be long-lasting, with growth spreading geographically as more regions pursue electrification and digitalisation.
   

2. Rebounding MJP aluminium premiums signal renewed market confidence 
   Fastmarkets’ MJP aluminium premium index has rebounded sharply to $120–$130 per tonne, up from the October low of $57–$75 per tonne. Confidence has improved following the US–Japan trade deal and new Japanese leadership. Nearby LME spreads are in double‑digit contango, reinforcing carry trades and inventory holding, while European premiums remain firm, adding a supportive global backdrop.
   

3. FOB WA alumina prices plunge amid supply normalization and refinery expansions
   The Fastmarkets FOB WA alumina index has fallen sharply to $315 per tonne, down from the record high of $800 per tonne reached at this time last year. Supply normalization and a ramp up in new refineries coming online from Indonesia and China has pushed the index down to $315 per tonne. Price weakness has emerged despite Alcoa’s announcement to permanently close its Kwinana’s 2.2 million tonnes refinery and the reduction in Rio Tinto Yawrun operation by 40% to 1.2 million tonnes per annum, in a bid to extend the plants life.
   

What do our analysts say?

Aluminium has regained bullish momentum after a brief November pullback, supported by strong year-to-date gains, firm premiums, and structural demand drivers such as electrification and digitalisation. While alumina prices have softened on supply normalisation, the outlook for aluminium remains positive, with bulls targeting double-digit growth into 2025. In light of such a backdrop, we remain constructive on aluminium’s price to potentially target $3,000 per tonne.

Andy Farida, Fastmarkets

Key points

1. Nickel prices hit post-Liberation Day lows in November
   The nickel cash price traded below the $15,000 per tonne level in November, dropping to a low of $14,280 per tonne, the lowest since Donald Trump’s “Liberation Day” sell-off in April.
   

2. Oversupply pressures nickel market toward further price declines
   The market remains in a state of significant oversupply, leaving little room for bullishness. The coming months are likely to see a further decline in prices or at best a return to sideways consolidation.
   

3. Nickel market faces supply risks despite structural oversupply
   Although the market remains in a state of structural oversupply – and is expected to remain in surplus until 2028 – supply-side risks are mounting. Indonesia – the world’s top miner of nickel – could take a firmer stance on restraining the country’s supply. There could also be delays in issuing mining permits in the New Year.
   

What do our analysts say?

The nickel market has been in surplus since 2022, thanks to structural oversupply. With Fastmarkets forecasting the market to remaining oversupplied until 2028, there is little scope to be bullish on prices in the near-term. A recovery in prices will require greater supply discipline from Indonesia, the world’s top miner of nickel.

Olivier Masson, Fastmarkets

Key points

1. LME lead prices see volatile swings, breaking and returning to range
   Three-month LME Lead prices had a month of two distinct halves, rising aggressively in the first half from $2,025 per tonne to $2,097 per tonne and in the process breaking out of a multi-month range that had held since early June, before slumping back to near the bottom of the long-held trading range by month end.
   

2. Fund activity fuels lead price rally with short-covering and fresh buying
   Fund buying and short-covering seemed to be the main driver, with the net fund long position rising to 18,795 lots on November 14, from 5,688 lots at the end of October. We had noted a polarized fund position at the end of October and had warned of potential for either a short-covering rally, or long liquidation, as it happened a mix of short-covering and fresh buying drove prices higher.
   

3. Lead price rally stalls as LME stocks surge
   The rally came to an abrupt halt when 45,150 tonnes of lead was delivered into warehouse Friday November 14 (reported in LME data on December 17), taking stocks to 266,125 tonnes. Prices ended the month back around $1,980 per tonne.
   

What do our analysts say?

Despite the pick-up in volatility in November that saw lead break out of its long-held range, prices ended the month back in the range and looking balanced again, although the fund position remains polarized, so there is still room for more volatility.

William Adams, Fastmarkets

Key points

1. China’s zinc surplus meets global shortfall amid export bottlenecks
   China has a significant surplus in zinc production, while the rest of the world faces a shortfall presently. Chinese exports hit a three-year high in October, but slim margins and logistical challenges are acting as a bottleneck, limiting how quickly the market can rebalance.
   

2. Zinc prices forecast to decline amid global surpluses and volatility 
   The average LME zinc price for 2025 is forecast at $3,218 per tonne, with a slight increase expected in the first half of 2026 due to ongoing regional disparities. However, prices are projected to decline as global surpluses continue into 2026-27, while macro factors will cause volatility into early 2026.
   

3. Zinc oversupply looms as smelter expansions outpace demand growth
   Stockpiling by Chinese smelter is creating downside pressure for zinc treatment charges presently. Despite this and recent guidance downgrades we believe the global market is facing notable oversupply in 2026-27 as mine and smelter expansions outpace tepid demand growth.
   

What do our analysts say?

Supply tightness continues to underpin LME zinc. But with Chinese metal now heading to LME warehouses and smelter expansions in Europe set for commissioning we believe the price bias could soften towards mid-2026.

James Moore, Fastmarkets

Key points

1. Tin prices hit three-year high amid prolonged supply disruptions
   Tin prices surged to a three-year high, with LME three-month tin touching $40,000 per tonne on December 1. Disruptions remain widespread, and with no clear path to normalization, the squeeze may extend well into the first quarter 2026.
   

2. Green and digital transition drives projected 40% surge in tin demand by 2030
   Tin’s essential role in electronics, EVs, solar, and data centres continues to fuel resilient demand. The International Tin Association projects a 40% surge in global tin use by 2030, powered by the green and digital transition.
   

3. High tin prices curb spot buying as market adapts to scarcity
   While supply tightness persists, high prices are curbing spot buying. Many manufacturers now purchase only as needed, signaling that the market has adapted to elevated price levels and long-term scarcity.
   

What do our analysts say?

While the tin market remains fundamentally undersupplied due to Myanmar’s stalled recovery and regulatory headwinds in Indonesia, short-term macro factors such as tighter dollar liquidity and weaker sentiment across risk assets may lead to temporary periods of consolidation or correction. Nevertheless, unless significant new supply becomes available, tin’s uptrend is likely to continue into early 2026.

Rory Deng, Fastmarkets

Key points

1. Copper market faces supply risks as 929,000 tonnes lost to mine disruptions
   The copper market remains sensitive to mine disruptions, with 2025 seeing nearly 929,000 tonnes lost due to unplanned outages, including from the major outage at the Grasberg mine in Indonesia after a fatal mudslide there in September. The outage effects extend into 2026 and possibly 2027, increasing supply risk and potential price volatility.
   

2. US-China trade easing boosts copper outlook, but near-term demand may dip
   While US-China trade tensions have eased, which is a positive for copper use, tariff front-running may have brought demand forward into the first half of the year, which means demand dynamics may look weak in the next 6 months or so. There is less ambiguity in the long term, however, driven by the buildout of AI infrastructure, electricity generation and grid expansions, clean energy, and continued EV adoption.
   

3. Copper emerges as a safe-haven asset amid geopolitical and economic uncertainty
   Copper is increasingly seen as a safe-haven asset alongside gold and silver, attracting investments amid geopolitical risks and concerns over fiat currency credibility, leading to synchronized inflows and price correlations among these metals.

What do our analysts say?

Copper prices reached record highs in October 2025 but have since entered a consolidation phase influenced by a stronger dollar and tighter liquidity. Despite short-term profit-taking, the market’s structural fundamentals remain bullish, supported by supply disruptions, regional availability distortions, resilient long-term demand driven by electrification and AI infrastructure, and elevated fund positioning.

Andrew Cole, Fastmarkets

Key points

1. US-Canada trade talks could reshape aluminium pricing amid tariff rollback prospects
   Trade negotiations between the United States and Canada remain stalled following the airing of the Reagan tariff advertisement. However, Canadian Prime Minister Mark Carney has expressed interest in resuming talks. Should discussions lead to a reduction in steel and aluminium tariffs, the impact on pricing could be significant. A rollback in tariffs may trigger a sharp correction in the US Midwest aluminium premium, currently at an all-time high of 88 cents/lb. This move could reverberate across global markets, prompting European aluminium premiums to retreat in response.
   

2. Aluminium prices surge amid supply disruptions and bullish breakout 
   Aluminium has enjoyed a strong bullish flow on the back of the bullish technical breakout above $2,700 per tonne and the barrage of supply concerns from several established smelters. Century’s aluminium operation in Iceland, Grundartangi, has announced that the affected potline will only be operational in 11 to 12 months and has affected 231,000 tonnes of aluminium. Meanwhile, South32’s Mozal power contract negotiations have stalled with Eskom, raising the probability that the smelter could be curtailed in March 2026.
   

3. Global aluminium deficit looms for 2026 amid rising consumption and supply challenges
   Considering the supply disruptions, we now forecast a global deficit of 142,000 tonnes in 2026, with China recording a deficit of 2.54 million tonnes, partially offset by a surplus of 2.40 million tonnes in the rest of the world. Global aluminium production is expected to reach 75.45 million tonnes in 2026, up by 2.2%, while global aluminium consumption is likely to increase by 3.0% to 75.592 million tonnes.
   

What do our analysts say?

The US-China trade truce, bullish fund positioning, as well as fresh supply worries out of Century (Iceland), South32 (Mozambique) and Rio Tinto (Australasia) aluminium smelters, ignited the bullish move in October. Only a bearish close below $2,700 per tonne will force us to switch our bullish bias to a bearish tone. In light of such a backdrop, we remain constructive on aluminium’s price to potentially target $3,000 per tonne.

Andy Farida, Fastmarkets

Key points

1. Nickel prices steady in October, averaging $15,080 per tonne
   The nickel price continued to trade on either side of the $15,000 per tonne level in October. The LME nickel cash price averaged $15,080 per tonne, down by 0.15% from the $15,102 per tonne average in September.
   

2. Nickel market oversupply persist as Indonesia’s role in balancing grows
   The market remains in a state of significant oversupply, a situation that has persisted since 2022. With Indonesia being the largest producer of nickel, the country must be part of the supply discipline needed to bring the market back into balance.
   

3. Indonesia’s mine quota reviews add supply risks, but nickel prices remain under pressure
   Indonesia is now implementing annual mine quota reviews – which could be used to limit supply – and has increased royalties. There is also greater environmental oversight in the country. However, these are merely supply risks since no concrete measures have been taken to limit domestic production significantly. Until concrete measures are announced, the price is unlikely to find support.
   

What do our analysts say?

Structural oversupply has left the nickel market in surplus since 2022, leading to weakening nickel prices. Since Fastmarkets expects another large market surplus this year, and for surpluses to continue, it is hard to expect any near-term improvement in pricing. For prices to see any significant upside, greater supply discipline is required.

Olivier Masson, Fastmarkets

Key points

1. LME lead prices break higher in November amid balanced market dynamics
   Three-month LME Lead prices continued to trade sideways in October, with both the top and bottom areas of the range tested, but eventually, prices broke higher in November. The fact prices had been trading sideways since July suggested a well-balanced market. International Lead and Zinc Study Group (ILZSG) data put the market in a 51,000-tonne surplus in the January–August period. In a 13-million-tonne market, that suggests an all-but-balanced supply and demand situation.
   

2. Volatile LME stocks see sharp inflows, rising to 266,000 tonnes in November
   LME stocks have become more volatile. While most days there is an outflow, there have been more incidents of large inflows, one in mid-October and another in mid-November. Stocks stood at around 266,000 tonnes on November 17, up from around 217,000 tonnes at the end of October. Cancelled warrants are also high at around 92,000 tonnes in mid-November.
   

3. Polarized fund positions signal potential for market volatility in November rally
   The fund position is polarized, with 42,395 lots of longs and 32,545 lots of shorts. This means there is plenty of potential to see short-covering or long liquidation should prices either extend the November rally or the rally stalls.
   

What do our analysts say?

The lead market looks well balanced as per the supply/demand numbers, but the recent price action has been bullish. As winter approaches, the stronger prices may well prompt restocking by battery makers and short covering by funds.

William Adams, Fastmarkets

Key points

1. Zinc price forecasts rise amid bullish sentiment, but downside risks loom
   Short-term zinc price forecasts have been upgraded due to bullish sentiment and market tightness, but there are warnings of downside risks from macroeconomic turbulence and a likely correction as supply grows.
   

2. Global zinc market faces tightness outside China, while oversupply builds domestically
   The zinc market remains tight outside China. By contrast, China’s zinc market is oversupplied as smelter expansions outpace lackluster demand. Financial conditions are limiting the flow of metal exports, but it is only a matter of time before Chinese exports and smelter expansions elsewhere rebalance the market.
   

3. Zinc prices face correction ahead amid projected oversupply in 2026-27
   Rather than being outright bullish, our fair value forecast still implies room for zinc to correct lower over the short-to-medium term as the global market enters a period of notable oversupply in 2026-27.
   

What do our analysts say?

Supply tightness outside China has intensified but could rapidly dissipate as Chinese metal starts to flow out.

James Moore, Fastmarkets

Key points

1. Tin prices hold strong in October amid Indonesian mining crackdown concerns 
   Tin prices remained elevated throughout October, consolidating gains despite brief volatility early in the month following reports of a crackdown on illegal mining in Indonesia. With multiple incidents this year, any fresh shocks continue to trigger pronounced moves in both prices and near-term spreads.
   

2. Tin supply disruptions persist as Myanmar’s exports plunge 70.7% in 2025
   Tin continues to command attention as supply disruptions persist. Myanmar’s ore feed remains unreliable, with concentrate imports still far below pre-suspension levels. Cumulative shipments to China for the first nine months of 2025 are down 70.7% year-on-year and 85.8% from 2023. A full normalization of supply from Myanmar is unlikely before the end of 2025.
   

3. Muted physical tin market persists despite elevated LME prices
   Despite elevated LME prices, physical market activity remains muted. Spot demand is subdued, and premiums in Europe, Asia, and the US have stayed broadly unchanged for months. Many downstream manufacturers are adopting a dip-buying strategy, securing only essential material as needed.
   

What do our analysts say?

While the tin market remains fundamentally undersupplied due to Myanmar’s stalled recovery and regulatory headwinds in Indonesia, short-term macro factors such as tighter dollar liquidity and weaker sentiment across risk assets may lead to temporary periods of consolidation or correction. Nevertheless, unless significant new supply becomes available, tin’s uptrend is likely to continue into early 2026.

Rory Deng, Fastmarkets